Prior to posting its Q1 earnings report, the Swedish streaming giant was valued at ~$30 billion, despite never having turned a profit. With no guidance, then, investors are making their own conclusions about Spotify's numbers. For the first three months of the year, revenue was up 26 per cent on 2017 at €1.1 billion, but it made an operating loss of €41 million.
The new milestone came as part of the firm's quarterly earnings announcement, and the subscriber base was in line with expectations.More news: Amazon goes big on AI in Boston
"Investors were hoping for a little more", Atlantic Equities analyst James Cordwell told Reuters. The operating result remained a loss of Euro 41 million, though down significantly on a loss of Euro 139 million in the year-earlier period.
Average revenue per user (ARPU) was €4.72 in Q1, down 14 percent YOY - something Spotify blames on growth of Family and Student plans, as well as the shift in market mix with growth in relatively lower ARPU regions, such as Latin America, and launches in new markets. Shares had run up 3 percent in regular trading ahead of its first report as a public company, and analysts said expectations may have become overblown. Of that subset, 75 million are paying subscribers, a figure which represents a 45% increase year-over-year. For reference, Apple Music has roughly 40 million subscribers.More news: Joshua Frazier drafted by Pittsburgh Steelers in seventh round
Spotify could raise its subscription prices (now $10 per month in the U.S.), but that could drive customers to the other music services run by its larger rivals.
"The current modest gross margins for Spotify are not an impediment to healthy and growing free-cash-clot generation", Morgan Stanley analyst Ben Swinburne wrote earlier this week.More news: Trump extends exemptions on steel, aluminum tariffs
Spotify said that it saw particularly strong growth for its free service in emerging economies such as Vietnam and Thailand, two markets which the company recently entered. Likewise, the company stated its Premium revenue would have been up 36 percent and ad-supported revenue would have grown 55 percent YOY, excluding the impact of foreign exchange rates. Monthly active users is forecast to hit between 198 million - 208 million.